MBS Live Recap: More Stock Losses Bring More Bond Bounces

The narrative has grown (remained?) the same for bonds lately.  If stocks are losing ground, then it's time to rally.  If stocks are stabilizing or recovering, it's time to sell.  Today was more of the same in that regard.

For the first few hours of the day, yields moved gradually higher despite the inability of core inflation to even meet forecast levels (in its defense, it was really really close!).  But when stocks began losing ground in a fairly convincing way, bonds began to improve.

Stock losses were compounded by headlines surrounding the Brexit process, where there was apparently some drama today regarding Theresa May's cabinet and its ability to agree on the current draft proposal.  After a few conflicting reports, it finally came out that there was sufficient agreement.  British currency snapped back to previous levels, but US equities only bounced modestly.  As such, bonds were able to maintain most of their stock-inspired gains by the close.